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The shipping industry has experienced a rollercoaster few years of highs and lows. Things have been gloomy for some, with a marked slowdown in areas such as Bulk, General Cargo, and Container Ships, which were all hit hard by the financial crash of 2008. On the other hand, Tankers and LNG are enjoying a relative boom due to oil price volatility. And on the whole, there are still around 85,000 large working vessels transporting goods across the globe.
Koji Sekimizu, Secretary General of the International Maritime Organisation (IMO) says “The shipping industry is in a difficult situation, but this is not new and I am sure that the shipping industry will survive. The reason for this is in the fact that the shipping industry is indispensable to the world.”
What are the issues affecting dry bulk?
Too many ships
The Chinese boom in ship building since 2005 had made it a very good time for ship owners able to meet the demand. As a result, many others wanted a piece of the prosperous dry bulk pie. Due to this, many ships were built without any commitments from cargo interests to use them. Now, supply of ships far exceeds demand, meaning there is a surplus of ships in the water (or not, as many don’t even leave the ship yard after being built), needing to carry cargo that doesn’t exist, or carrying cargo far more cheaply than they had been previously. The massive overcapacity in dry bulk has led to ships being chartered at rates as low as what they were in 2009. And, due to the current stagnant price for steel, older ships are not being scrapped and replaced by the new ships, which further adds to the excess capacity.
Bulk, general cargo and container ships have been further affected by the aforementioned lack of goods to carry. There is a weak demand for Europe’s exports, due to hampered purchasing power in Asia. As a result, 2015 was the first year in a generation where China’s exports and imports actually declined. This has had a massive effect on the amount of goods that need to be shipped and the global economy, especially when following what was already a disappointing Christmas and Chinese New Year lull. Shipping consulting firm Drewry Maritime Research estimates the container shipping sector faces a loss of more than $5 billion in 2016. To stabilise the stormy outlook of the industry, a balance between supply and demand needs to be reached.
How can this be resolved?
It may look bleak at the moment, but the ship hasn’t quite sailed for the maritime industry. Industry-wide efforts are being made to modernise procedures. Although the workforce will have to be reduced due to the oversupply of tonnage, there will always be a need for skilled, committed seafarers to optimise results. A survey by Platts highlights that most of the industry players think that the industry will take around a year to recover, but around half thought that there would be no positive changes for at least three years.[i]
As Sekimizu states, “the shipping industry is indispensable”- we will always need to ship things around the world. What steps will be taken to boost its business in the modern world?
Making the Industry More Appealing To Talent
As outlined above, because excess shipyards have to be shut down and workforces trimmed, it’s more important than ever that the staff shipping companies take on are talented and committed sea farers who want to build a career in the sector.[ii] To show that the industry offers diverse opportunities, efforts are being made to create offshore jobs for young people, although cost can make this difficult. Meanwhile, key industry players seem to have recognised that the future best performers need to be engaged young. The innovative IMO Maritime Ambassador Scheme promotes the maritime professions among young generations starting from primary school, and governments are appointing ambassadors in their own countries with an eye to future export needs.[iii]
Bringing technology to the forefront
Today, we live in a digital world, and the shipping industry has been slow to embrace this reality. Collecting data on why ships fail and analysing their safety and performance will lead to more efficiency and a higher quality service. We have more and bigger ships (such as the colossal MSC Oliver and its sister ships, which dominate European and Asian ports). Using big data and new technologies to drive the sector into the modern digital world is critical, because this will in turn increase the appeal for young people to build a career in maritime.
The list here is far from exhaustive, and it has been recognised that greater global cooperation will make a key difference. Events like the Asia Pacific Maritime exhibition - the largest such exhibition of the year, which takes place in March - offers a fantastic opportunity to bring the shipping industry together and debate how to thrust it into the future. With its slogan of “People, Ideas, Opportunity”, this is a perfect occasion for networking, thinking outside the box and developing creative opportunities and ideas.
If you need help hiring individuals with the skills, motivation and experience to push your business to the next level, CSG’s Maritime Team have an unparalleled network of global mid-senior level contacts within the sector. And, with decades of specialist marine recruitment experience behind us, we can frequently access the high performers that traditional recruitment methods simply can’t. Shipping is a cyclical industry so it’s critical for shipping companies to have great, technically skilled and driven people adding value to every project, so that you can enjoy years of smoother sailing in the future. Visit our dedicated services page to find out more, or if you're looking to find a new opportunity within the sector, find out what we're currently handling here.